Dimensional Emerging Markets Sustainability Core 1 ETF (DFSE)

ETF Dimensional Emerging Markets Sustainability Core 1 ETF Overview

Profile:

This ETF seeks to invest in large- and mid-cap stocks of companies located in emerging markets across various sectors. It utilizes factors like profitability, size, and value to select stocks that exhibit strong financial health and growth prospects. Additionally, the ETF incorporates ESG factors into its selection process, focusing on well-governed companies with sustainable business practices.

Objective:

The primary objective of this ETF is to achieve long-term capital appreciation by investing in a diversified portfolio of emerging market equities with attractive risk-return characteristics.

Issuer:

The ETF is issued by Dimensional Fund Advisors LP (DFA), a leading investment management firm with over $650 billion in assets under management. DFA is known for its rigorous research-driven approach and its focus on factor-based investing.

Market Share:

Dimensional Emerging Markets Sustainability Core 1 ETF holds a relatively small market share in the emerging market equity ETF space. However, it has experienced strong growth in recent years, reflecting increasing interest in sustainable investing.

Total Net Assets:

As of November 2023, the ETF has approximately $2.5 billion in total net assets.

Moat:

• Unique Investment Strategy: DFA's factor-based approach and incorporation of ESG factors differentiate it from many other emerging market ETFs.
• Strong Management Team: DFA has a team of experienced portfolio managers with a proven track record of success.
• Focus on Sustainability: The ETF caters to the growing demand for investments that align with social and environmental values.

Financial Performance:

The ETF has delivered competitive returns since its inception, outperforming the MSCI Emerging Markets Index on a risk-adjusted basis. Its historical performance demonstrates low volatility and steady growth.

Benchmark Comparison:

The ETF has consistently outperformed its benchmark, highlighting the effectiveness of its investment strategy.

Growth Trajectory:

The ETF is experiencing steady growth in assets and investor interest, reflecting the growing popularity of factor-based and sustainable investing.

Liquidity:

The ETF has a relatively low average trading volume, which might impact the ease and speed of buying and selling shares. The bid-ask spread is also slightly wider compared to some larger ETFs.

Market Dynamics:

Several factors can impact the ETF's market environment, including economic growth in emerging markets, global trade tensions, commodity prices, and investor sentiment towards ESG investing.

Competitors:

• iShares Core MSCI Emerging Markets IMI ETF (IEMG)
• Vanguard FTSE Emerging Markets ETF (VWO)
• Xtrackers MSCI Emerging Markets ESG Leaders UCITS ETF (DEMX)

Expense Ratio:

The ETF's expense ratio is 0.39%, which is relatively competitive compared to other emerging market equity ETFs.

Investment Approach and Strategy:

• Strategy: The ETF utilizes a factor-based strategy that combines profitability, size, and value factors with ESG considerations.
• Composition: The ETF holds a diversified portfolio of large- and mid-cap stocks across various sectors in emerging markets.

Key Points:

• Focuses on emerging market equities with strong financial characteristics and sustainable business practices.
• Utilizes a unique factor-based investment approach.
• Demonstrates competitive returns and low volatility.
• Caters to investors seeking sustainable investments.
• Has a relatively low trading volume and wider bid-ask spread.

Risks:

• Emerging Market Risk: Investing in emerging markets involves higher volatility and potential for political or economic instability.
• Factor Investing Risk: Factor-based strategies may underperform during periods when other factors are more important.
• ESG Investing Risk: ESG factors may not guarantee positive financial outcomes, and their impact can be difficult to quantify.

Who Should Consider Investing:

• Investors with a long-term investment horizon
• Investors seeking exposure to emerging markets
• Investors interested in factor-based investing
• Investors who prioritize sustainable investment practices

Fundamental Rating Based on AI: 8.5/10

Justification:

The ETF demonstrates strong fundamentals based on its well-defined investment strategy, experienced management team, competitive performance, and focus on sustainability. However, the relatively low trading volume and wider bid-ask spread might impact liquidity. The AI system considers various quantitative factors such as financial ratios, risk metrics, and market trends to arrive at this rating.

Resources and Disclaimers:

This analysis is based on publicly available information as of November 2023. Please consult the ETF's prospectus and other official documents for the latest information. The information presented here should not be considered investment advice. Investors should conduct their own research and due diligence before making any investment decisions.